Tri-state delta codec method and system

A delta modulation method and system is provided for processing signals in a digital communications system. The method quantizes an input signal using a tri-state quantizer into a quantized value selected from a set of three different quantized values including a low value, a middle value, and a high value. The selection of the quantized value is based on a comparison between the input signal and a predicted signal of a corresponding sampling period. The method generates from the quantized value an output signal representative of the input signal, determines a predicted signal of the next sampling period, and then feeds the predicted signal of next sampling period back to the tri-state quantizer.